The market took a sharp downturn last month…
Thanks to record inflation and a hawkish shift in Fed policy… risk-averse investors have been on a selling spree.
As I write, the S&P 500 is down about 7.5% from its recent all-time high.
Last week in the Daily, my team and I shared some strategies you can use to protect your portfolio from volatility now and in the future.
Today, I want to share the top two assets I’m holding to protect my long-term investment money from short-term pullbacks and volatility.
The first is a no-brainer for my longtime subscribers… while the second is a little-known way the rich protect their money during volatile times to achieve long-term gains.
Hedge No. 1: Bitcoin
Over the past two years, central banks across the world printed unprecedented amounts of money to rescue their economies from the pandemic.
But that money printing has led to rising inflation. And the Federal Reserve recently signaled it would raise rates to throttle back rising prices.
I’m not sure how high the Fed will raise rates… but the idea alone has rattled the markets, especially in growth stocks.
For instance, we’ve seen the tech-heavy Nasdaq drop 10.5% since the start of the year.
During volatility, you need to find a store of value that will offer breathtaking returns over the long run.
And one of the best is bitcoin.
I know it sounds crazy, especially since bitcoin is experiencing its own volatility right now.
But hear me out…
The key emphasis is on the term long run. On any given day, bitcoin can be down over 50%. But over the long run, its performance has smashed the performance of every major asset and money manager in the world.
I expect that long-run outperformance to continue for many more years.
Here’s why…
In the past, gold was the go-to store of value to protect against volatility and low interest rates. Today, that’s no longer the case.
Since the pandemic bottom… gold is only up about 22%. In that same period, bitcoin’s value has increased 504%. Bitcoin is emerging as the asset of choice when money printing strikes, not gold.
Now, if you’re a gold bug, it might be hard to accept that anything – let alone bitcoin – could replace gold.
After all, gold has thousands of years of history, while bitcoin has only been around for a decade. But people also used horses to get around for thousands of years. Then, in less than a decade, cars rendered horses obsolete.
So, I believe bitcoin offers the single-best risk/reward scenario of all the assets that make up my investment portfolio.
Like gold, you can’t “print” more bitcoin. Unlike gold, you don’t have to risk a lot of money on bitcoin to make a huge return.
Bitcoin is equally scarce, durable, and private. But it’s more easily stored, transported, and exchanged.
So that makes gold the horse… And bitcoin the automobile.
As I’ve written to you before, we know younger Americans will be inheriting $68 trillion from their parents and grandparents over the next 25 years.
And this group overwhelmingly prefers digital assets…
One study from deVere Group, an independent financial advisory, reported more than two-thirds of millennials said they prefer bitcoin over gold as a safe-haven asset.
As more people come to terms with that idea… we will see bitcoin’s price soar higher and higher for many years to come.
And while bitcoin is down since the start of the year… its current price of $38,000 offers a low-cost entry point relative to my 2025 target price of $500,000.
That’s why I highly recommend owning bitcoin or buying more during periods of weakness… and why it’s my No. 1 long-term hedge against short-term market volatility.
Hedge No. 2: The “Hidden” Market
My No. 2 long-term hedge isn’t in crypto… but it does offer a chance at massive crypto-like gains while protecting your portfolio.
The asset I’m talking about is in a “hidden” market: Private equity, or what I call “pre-IPOs.”
Private equity is the playground for rich venture capitalists and the ultra-connected.
For years, Wall Street has walled it off from you.
And for good reason: The gains it’s pocketing are truly massive – far bigger than what you can make from publicly traded stocks.
According to one study, private market investing has made almost four times the return of public market investing over the last two decades.
That covers the dot-com crash, the 2008 financial crisis, the 2010 flash crash, and 2020’s COVID-19 crash.
Another report by asset manager Blackstone found that private equity consistently outperforms public markets… while providing diversification, lower volatility, and protection in times of market stress.
On top of that, the gains are truly life changing. Consider this…
If you bought Facebook (now Meta), Airbnb, or Uber on the day they went public, you’d be sitting on gains of 706%, 120%, and down 17% today, respectively.
Not bad overall.
But if you were well-connected or knew an insider, you would’ve seen life-changing gains.
For example, some of the earliest investors – who bought those companies before they went public – would have seen gains of 868,289%, 1,497,300%, and 4,076,567% today.
That’s the power of investing in the private markets… But it’s not as easy as simply buying the next “hot” pre-IPO.
That’s because there are two paths to pre-IPO profits: What I call the “Hype Hole” and “Blueprint” paths.
The Hype Hole is the one most retail investors fall into. The Blueprint is the one Wall Street elites and well-connected Silicon Valley insiders use to make their fortunes.
Going down the Hype Hole path could take you decades to achieve financial freedom… but if you take the Blueprint path, you could achieve it this year.
That’s why I recently shared details on my first Blueprint deal of 2022. It’s a world-class operator in the world’s oldest pastimes. But it’s laying the groundwork for a move into what I expect to be the biggest tech trend of the year: the metaverse.
Outside of crypto, I can’t think of any other asset in which you can risk a tiny grubstake for the potential of life-changing gains.
So, click here to learn more about this Blueprint pre-IPO… but you must act now.
If you’re worried about the current volatility in the market, consider alternatives like bitcoin and private equity as hedges.
Not only can they protect your wealth in the long term… they can also help you achieve financial freedom faster than traditional assets.
Let the Game Come to You!
Teeka Tiwari
Editor, Palm Beach Daily